Cablevision’s Weakness Adds to Recent Cable Woes

By Avi Salzman

Cable companies have had a difficult week. Time Warner Cable (TWC) fell hard on Monday after reporting a larger than expected decline in video customers. And Comcast (CMCSA) CFO Michael Angelakis raised eyebrows with his sale of 134,170 shares of the cable company’s stock.

Today, its Cablevision’s (CVC) turn to suffer. The company beat analysts’ expectations for core earnings, but also showed a larger than expected decline in video customers even as it added high-speed data customers. Core earnings of 23 cents were 7 cents ahead of Street estimates. Revenue met expectations.

Capital expenditures rose to $809.2 million from $574.5 million last year; the rise in capex spending this year is considered a positive by some investors, who expect the company produce better cash flow in the future as capex falls. But Cablevision isn’t showing much ability to grow, argues Bernstein analyst Craig Moffett.

“Revenue of $1.69B met consensus, but organic revenue growth is now running at just 0.4% YoY. And
it is getting worse. Sequentially, growth was -1.5%,” he writes. Margins are also below Street expectations, and organic EBITDA is falling, he says.

Moffett notes that the stock is already relatively expensive.

“If Cablevision were a cheap stock, the two-sided bull/bear debate would make for a compelling deep value discussion,” he writes. “It is not. Cablevision is by far the most expensive cable stock… and it has by far the slowest growth.”

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.